Hutchison Rejects Allegations

Friday, August 20, 1999

Hutchison Whampoa Ltd. rejected allegations made by a U.S. senator that it controlled both ends of the Panama Canal, saying it had no influence over the canal’s operation or shipping traffic.
“What has been alleged about is totally untrue and unfounded,” said Nora Yong, spokeswoman for Hutchison Port Holdings.
The Hong Kong-based company also denied the senator’s allegations it was connected to China’s military.
Senate Majority Leader Trent Lott, a Mississippi Republican, last week released a letter sent Aug. 1 to U.S. Defense Secretary William Cohen complaining that Hutchison’s operation of container ports at each end of the canal was a security threat and a sign of China’s growing influence over the strategically important waterway.
“This administration is allowing a scenario to develop where U.S. national security interests could not be protected without confronting the Chinese communists in the Americas,” wrote Lott. “U.S. naval ships will be at the mercy of Chinese-controlled pilots and could even be denied passage through the Panama Canal by Hutchison, an arm of the People’s Liberation Army.”
Hutchison, one of Hong Kong’s biggest blue chip conglomerates, is 49.97 percent owned by property developer Cheung Kong (Holdings) Ltd. and controlled by Hong Kong tycoon Li Ka-shing, who has connections in high places in Beijing.
In a separate statement, Hutchison denied any ties to the PLA. “Mr. Li Ka-shing is the chairman of both Cheung Kong and Hutchison Whampoa. He is a well-known entrepreneur and has no connection whatsoever with the People’s Liberation Army,” the company said. Yong said Hutchison merely operated container terminals at the ports of Balboa on the Pacific Ocean side of the Panama Canal and Cristobal on the Atlantic side.
Its subsidiary, Panama Ports Co., did not control shipping traffic through the canal, she said. “We do not operate or control the pilotage of vessels and have no influence on vessels transiting the canal. This is the same as it is in Hong Kong or any other port we operate,” she said. She said piloting of vessels would fall under control of the Panamanian government, which is setting up a canal authority. Hutchison would have no influence over the authority.
Hutchison Whampoa has extensive worldwide operations in container ports, property, telecommunications and retailing.
The Hong Kong government owns 8.83 percent of Hutchison and 10.76 percent of Cheung Kong, acquired largely through last year’s stock market intervention.
According to the most recent reporting data from Lipper, a Reuters company, private investment funds held 17.1 percent of Cheung Kong and 9.36 percent of Hutchison.
Private stakes of less than 10 percent of need not be disclosed under Hong Kong securities laws.